The British pound initially tried to rally during trading on Wednesday, but then rolled over to show signs of exhaustion again towards the 1.31 handle. With the Federal Reserve having a press conference late in the day on Wednesday, obviously, a lot of things can change. However, it appears that the British pound is simply trying to relax from the bullish move that has happened.
The Brexit situation continues to cause a lot of issues, as the back and forth between lawmakers continue to be a major driver of where the British pound will go. If the Brexit is a softer Brexit, that will, of course, help the British pound, as it is more favorable towards British businesses. Beyond that, there is also a lot of talk about the possibility of a delayed Brexit, which also brings down the possibility of a hard Brexit.
GBP/USD Video 31.01.19
We have recently broken above the 200 day EMA, and it is starting to curl to the upside. That is a bullish sign, and the 200 day EMA should offer a significant amount of support. We also broke above the down trending line of the previous descending triangle, so that, of course, is a bullish sign as well. Over the longer-term, it does look like we are trying to do what is known as a “golden cross”, when the 50 day EMA breaks above the 200 day EMA. We are obviously still a distance away from there, but it certainly looks as if what we are trying to accomplish with this latest surge higher.
